If a Business Won't Pay a Living Wage, It Shouldn't Exist

(Photo: Brave New Films / Flickr)Last week, thousands of fast food workers from across the country walked off their jobs to demand a living wage of $15 an hour. Ever since, the Republican talking point machine has been running on all cylinders.

According to pundits on the right, giving fast food workers or any other workers, for that matter, a $7 or $8 bump to their hourly wages would cut so much into the bottom lines of “job-creators” that business owners would have to either pass the cost of a living-wage onto consumers or simply stop hiring new workers altogether.

But lost among all the noise on the right is one very, very important point: getting tax preferences and limitations on liability to do business in the United States is a privilege, not a right. It’s a privilege that we as a society offer to budding entrepreneurs and big business alike in exchange for goods, services, and jobs.

Look at it this way: when someone opens up a business, they’re entitled to all sorts of special tax breaks that most people can’t get. They can write off fancy meals; they can write off nights stayed at five-star hotels; they can write off airfare to anywhere in the world they do business, or even might do business; and they can even write off any legal expenses they incur when they get busted for breaking the law. Drug dealers who push pot can’t write off their lawyer’s fees, but drug dealers at Big Pharma, even when they lie and break the law in ways that kill people, can - all because they’re incorporated.

All these breaks come in exchange for the company receiving these benefits giving society something back in return. Besides a useful service like selling meals or a good product like a well-made car, the single most important thing a business owner can give back to society is a well-paying job with benefits.

A job that pays a living wage isn’t just good for the workers who get to take home a livable paycheck, it’s good for other business owners and the economy as a whole. Businesses need people with a reasonable income to buy their goods. When workers are paid so little that they can barely afford to eat, they can’t spend additional money and as a result, the entire economy suffers. This is economics 101.

That implicit contract between society and the business owner used to be common knowledge in this country and, until the Reagan Revolution, was kept intact by businesses. Now, however, corporate America has thrown it out the window.

Walmart is the most egregious example. The nation’s largest employer is one big corporate welfare scheme for the company’s executives and the billionaire Walton family.

Walmart makes nearly $35,000 in profit every minute and, as of 2012, its average annual sales stood at $405 billion dollars.

According to Mother Jones, the six Waltons, whose money comes from Walmart, control an estimated $115 billion dollar fortune. In total, that’s more than a staggering 42% of Americans combined.

And where did they get all that money? They took it out of the business instead of paying their workers a living wage.

Thus, at the same time that Walmart executives are raking in the millions and the Walton family’s fortune is ballooning, Walmart employees struggle to get by.

The average Walmart employee makes about $9 per hour, and would have to work over 7 million years at that rate to accumulate as much wealth as the Waltons have. To make matters worse, only some of the company’s employees qualify for its very minimal health insurance plan.

As a result, you and me - and the rest of America’s taxpayers - are subsidizing Walmart by paying for the healthcare costs, housing, and food of Walmart employees. In fact, Walmart employees are the single largest group of Medicaid recipients in the United States.

A report released earlier this year by Congressional Democrats showed how much taxpayers subsidize the billionaire Walton Family at just one Walmart store in Wisconsin.

That report found that just that one Wisconsin store “costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year.”

That’s $1.7 million that could be used to build a new school for kids, patch up one of our country’s many crumbling bridges, or build a community health center. Instead, the Walton billionaires are taking that $1.7 million as dividends and they even get their own special low tax rate – about half of what working people pay – because it’s dividend income.

Walmart isn’t living up to its end of the American business bargain. It gets billions of dollars in taxpayer subsidies while its employees need government assistance to survive. If we're going to give businesses, like Walmart, the privileges and tax breaks associated with running a business, they should at the very least conduct themselves in ways that benefit society, rather than hurt it.

Fortunately, there is an alternative. Costco, a wholesale distributor and one of Walmart’s major competitors, is among America’s most successful companies. In the first quarter of 2013 alone, its profits “jumped 19 percent to $459 million,” beating out its rivals K-Mart, Target, and, of course, Walmart. Since 2009, its stocks have doubled in value and profits are up 15 percent. But unlike Walmart, Costco pays its workers a living wage, and then some. The average Costco employee makes a little over $20 an hour and takes home, on average, around $45,000 a year. By comparison, the average yearly pay of an employee at Walmart’s wholesale unit, Sam’s Club, is only about $17,500.

But that’s not even the best part. Costco offers customers cheap prices that are comparable to or even better than those offered at Walmart, all while paying its workers a decent wage and giving almost 90 percent of them company-subsidized health care plans.

So what’s the difference between the two chain stores? Costco’s founders, Jeffrey Brotman and James Sinegal, aren’t among the world’s super rich like the Walton family. The Walton billionaires bleed their workers dry and it makes them one of the richest families in the world. The guys who started and the executives who run Costco are merely multi-millionaires.

The point here is that it is possible for companies to pay their workers a living wage, make money, and give their customers an excellent product, all at the same time. The idea that we have to choose between paying workers well and having successful businesses is just false. That choice only exists when the owners insist on squeezing billions out of their workers.

If a Business Won't Pay a Living Wage, It Shouldn't Exist

(Photo: Brave New Films / Flickr)Last week, thousands of fast food workers from across the country walked off their jobs to demand a living wage of $15 an hour. Ever since, the Republican talking point machine has been running on all cylinders.

According to pundits on the right, giving fast food workers or any other workers, for that matter, a $7 or $8 bump to their hourly wages would cut so much into the bottom lines of “job-creators” that business owners would have to either pass the cost of a living-wage onto consumers or simply stop hiring new workers altogether.

But lost among all the noise on the right is one very, very important point: getting tax preferences and limitations on liability to do business in the United States is a privilege, not a right. It’s a privilege that we as a society offer to budding entrepreneurs and big business alike in exchange for goods, services, and jobs.

Look at it this way: when someone opens up a business, they’re entitled to all sorts of special tax breaks that most people can’t get. They can write off fancy meals; they can write off nights stayed at five-star hotels; they can write off airfare to anywhere in the world they do business, or even might do business; and they can even write off any legal expenses they incur when they get busted for breaking the law. Drug dealers who push pot can’t write off their lawyer’s fees, but drug dealers at Big Pharma, even when they lie and break the law in ways that kill people, can - all because they’re incorporated.

All these breaks come in exchange for the company receiving these benefits giving society something back in return. Besides a useful service like selling meals or a good product like a well-made car, the single most important thing a business owner can give back to society is a well-paying job with benefits.

A job that pays a living wage isn’t just good for the workers who get to take home a livable paycheck, it’s good for other business owners and the economy as a whole. Businesses need people with a reasonable income to buy their goods. When workers are paid so little that they can barely afford to eat, they can’t spend additional money and as a result, the entire economy suffers. This is economics 101.

That implicit contract between society and the business owner used to be common knowledge in this country and, until the Reagan Revolution, was kept intact by businesses. Now, however, corporate America has thrown it out the window.

Walmart is the most egregious example. The nation’s largest employer is one big corporate welfare scheme for the company’s executives and the billionaire Walton family.

Walmart makes nearly $35,000 in profit every minute and, as of 2012, its average annual sales stood at $405 billion dollars.

According to Mother Jones, the six Waltons, whose money comes from Walmart, control an estimated $115 billion dollar fortune. In total, that’s more than a staggering 42% of Americans combined.

And where did they get all that money? They took it out of the business instead of paying their workers a living wage.

Thus, at the same time that Walmart executives are raking in the millions and the Walton family’s fortune is ballooning, Walmart employees struggle to get by.

The average Walmart employee makes about $9 per hour, and would have to work over 7 million years at that rate to accumulate as much wealth as the Waltons have. To make matters worse, only some of the company’s employees qualify for its very minimal health insurance plan.

As a result, you and me - and the rest of America’s taxpayers - are subsidizing Walmart by paying for the healthcare costs, housing, and food of Walmart employees. In fact, Walmart employees are the single largest group of Medicaid recipients in the United States.

A report released earlier this year by Congressional Democrats showed how much taxpayers subsidize the billionaire Walton Family at just one Walmart store in Wisconsin.

That report found that just that one Wisconsin store “costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year.”

That’s $1.7 million that could be used to build a new school for kids, patch up one of our country’s many crumbling bridges, or build a community health center. Instead, the Walton billionaires are taking that $1.7 million as dividends and they even get their own special low tax rate – about half of what working people pay – because it’s dividend income.

Walmart isn’t living up to its end of the American business bargain. It gets billions of dollars in taxpayer subsidies while its employees need government assistance to survive. If we're going to give businesses, like Walmart, the privileges and tax breaks associated with running a business, they should at the very least conduct themselves in ways that benefit society, rather than hurt it.

Fortunately, there is an alternative. Costco, a wholesale distributor and one of Walmart’s major competitors, is among America’s most successful companies. In the first quarter of 2013 alone, its profits “jumped 19 percent to $459 million,” beating out its rivals K-Mart, Target, and, of course, Walmart. Since 2009, its stocks have doubled in value and profits are up 15 percent. But unlike Walmart, Costco pays its workers a living wage, and then some. The average Costco employee makes a little over $20 an hour and takes home, on average, around $45,000 a year. By comparison, the average yearly pay of an employee at Walmart’s wholesale unit, Sam’s Club, is only about $17,500.

But that’s not even the best part. Costco offers customers cheap prices that are comparable to or even better than those offered at Walmart, all while paying its workers a decent wage and giving almost 90 percent of them company-subsidized health care plans.

So what’s the difference between the two chain stores? Costco’s founders, Jeffrey Brotman and James Sinegal, aren’t among the world’s super rich like the Walton family. The Walton billionaires bleed their workers dry and it makes them one of the richest families in the world. The guys who started and the executives who run Costco are merely multi-millionaires.

The point here is that it is possible for companies to pay their workers a living wage, make money, and give their customers an excellent product, all at the same time. The idea that we have to choose between paying workers well and having successful businesses is just false. That choice only exists when the owners insist on squeezing billions out of their workers.